• (7B) Section 36B is treated as coming into force on 23 November 2010.

• (9B) Section 34E is treated as coming into force on 1 October 2011.

• (12) Sections 22 and 60 are treated as coming into force on 13 September 2012.

• (12B) Section 33B is treated as coming into force on 27 September 2012.

• (13) Section 57(5) is treated as coming into force on 1 October 2012.

• (14) Section 94 is treated as coming into force on 2 November 2012.

• (14B) Sections 12B, 34B, 57(1B), (19C), (19D), (23B), (25B), (25C), (25D), and (25E), 57B, 74(2) and (3), and 94B are treated as coming into force on 31 December 2012.

4B Section CC 1B and CC 1C inserted

• (1) After section CC 1, insert:

  “CC 1B Consideration for agreement to grant, renew, extend, or transfer leasehold estate or licence

  • “When this section applies

    “(1) This section applies when a person (the payee) derives an amount as consideration for the agreement by the payee to the grant, renewal, extension, or transfer of a right (the land right) that is a leasehold estate, or a licence to use land.

    “Exception for payment to holder by transferee

    “(2) This section does not apply to an amount derived––

    • “(a) by the payee as the holder of a land right; and

    • “(b) as consideration for the transfer of the land right to the person paying the amount.

    “Income

    “(3) The amount is income of the payee.

    “Exception for tenant of residential premises

    “(4) The amount is not income of the payee to the extent that the payee derives the amount as a tenant of residential premises.

    “Defined in this Act: amount, income, land, leasehold estate, pay

  “CC 1C Consideration for agreement to surrender leasehold estate or terminate licence

  • “When this section applies

    “(1) This section applies when a person (the payee) derives an amount as consideration for the agreement by the payee to the surrender of a leasehold estate or the termination of a licence to use land, and the payee is—

    • “(a) the person who owns the estate in land from which the leasehold estate or licence is granted:

    • “(b) the person who owns the leasehold estate or licence.

    “Income

    “(2) The amount is income of the payee.

    “Exception for tenant of residential premises

    “(3) The amount is not income of a payee to the extent that the payee derives the amount as a tenant of residential premises.

    “Defined in this Act: amount, income, land, leasehold estate, own”.

  (2) Subsection (1) applies to an amount that is—

  • (a) derived on or after 1 April 2013; and

  • (b) not derived as consideration for the agreement, before 1 April 2013, to a lease of land or a licence to use land.

10B Section CW 16 amended (Allowance of Governor-General and other benefits and privileges)

• After section CW 16(b), insert as a list of defined terms “exempt income”.

12B New heading and section CW 65 (New Zealand Railways Corporation restructure: exempt income)

• After section CW 64, insert:

  “Restructuring under New Zealand Railways Corporation Restructuring Act 1990

  “CW 65 New Zealand Railways Corporation restructure: exempt income

  • “Railways vesting and land-related payments

    “(1) The following are exempt income of KiwiRail Holdings Limited and any company in which it directly or indirectly owns 100% of the shares (wholly-owned subsidiary):

    • “(a) an amount derived from the Railways vesting:

    • “(b) an amount derived by KiwiRail Holdings Limited or a wholly-owned subsidiary in relation to––

      • “(i) a disposal or grant of land, if that land is owned on 31 December 2012 by the Crown or New Zealand Railways Corporation:

      • “(ii) the termination or variation of a lease granted by the Crown or New Zealand Railways Corporation over land, if that land is owned on 31 December 2012 by the Crown or New Zealand Railways Corporation.

    “Meaning of Railways vesting

    “(2) In this section, Railways vesting has the same meaning as in section EZ 68 (Definitions).

    “Defined in this Act: amount, company, dispose, exempt income, land, lease, Railways vesting, share”.

12C Section CX 2 amended (Meaning of fringe benefit)

• In section CX 2(1)(b)(i), after “CX 9,” insert “CX 9B,”.

12D Section CX 9B inserted (Some parking for motor vehicles)

• After section CX 9, insert:

  “CX 9B Some parking for motor vehicles

  • “When fringe benefit may arise

    “(1) A fringe benefit may arise on a day when an employer makes a parking space available to an employee if—

    • “(a) the parking space is in an urban area specified by subsection (5) or by the Governor-General by Order in Council under subsection (6):

    • “(b) the parking space is provided to the employer—

      • “(i) by a commercial car park operator; and

      • “(ii) for consideration of more than an amount specified by subsection (5) or by the Governor-General by Order in Council under subsection (6):

    • “(c) the employee would be entitled to a greater amount of employment income should the employee choose, or have chosen, not to receive the benefit of the parking space.

    “Fringe benefit from allocated parking space

    “(2) A fringe benefit of 1 parking space arises on a day when the employer makes available to the employee a parking space that is allocated to the sole use of the employee, if the use of the parking space is not restricted to a business or certificated vehicle.

    “Fringe benefit from unallocated parking space

    “(3) A fringe benefit arises on a day, from the availability of a pool parking space for an employee, of—

    • “(a) 1 parking space, if the number of pool parking spaces is equal to or greater than the total number of pool parking users and paragraphs (b) and (c) do not apply; or

    • “(b) zero, if the employee is restricted to the use of a pool parking space for parking outside the hours between 6 am and 10 pm; or

    • “(c) zero, if the number of pool parking spaces is equal to or greater than the number of pool parking users and the employee is restricted to the use of a pool parking space for parking a business or certificated vehicle; or

    • “(d) a fraction of a parking space, if the number of pool parking spaces is less than the number of pool parking users and paragraph (b) does not apply, with the fraction calculated using the formula—

      parking ratio × (day users – business)

      (day users).

    “Definition of items in formula

    “(4) In the formula—

    • “(a) parking ratio means––

      • “(i) 1, if the item day users is less than or equal to the number of pool parking spaces on the day; or

      • “(ii) the number of pool parking spaces on the day divided by the item day users, if subparagraph (i) does not apply:

    • “(b) day users means the number of pool users whose hours of employment on the day both begin and end in the period from 6 am to 10 pm:

    • “(c) business means the number of pool parking users who, on the day, are restricted to the use of a pool parking space for parking a business or certificated vehicle in the period from 6 am to 10 pm.

    “Urban areas and amounts charged for parking spaces

    “(5) Subject to an Order in Council under subsection (6),—

    • “(a) the urban areas referred to in subsection (1)(a) include—

      • “(i) the Central Area as defined in the Central Area Section of the Auckland Council District Plan—Operative Auckland City:

      • “(ii) the Central Area as defined in the Wellington City District Plan:

    • “(b) the amount of consideration referred to in subsection (1)(b) for the provision of a parking space by a commercial parking operator to the employer is $210 per month.

    “Orders in Council

    “(6) The Governor-General may from time to time, by Order in Council,—

    • “(a) add an urban area to the urban areas referred to in subsection (1)(a):

    • “(b) remove an urban area from the urban areas referred to in subsection (1)(a):

    • “(c) set or vary the boundaries of an urban area referred to in subsection (1)(a):

    • “(d) set or vary an amount referred to in subsection (1)(b)(ii).

    “Definitions

    “(7) In this Act, for an employer,—

    “business or certificated vehicle means a motor vehicle that has a valid disabled parking permit, is a work-related vehicle, or is a car that the employer—

    • “(a) owns, or leases from a person other than an employee or person associated with an employee; and

    • “(b) makes available to more than 1 employee for business purposes during business hours; and

    • “(c) does not make available for the private use of the employee, other than for travel that arises incidentally to travel for business purposes and is not travel between the employee's work place and the employee's place of residence

    “a commercial car park operator is a person who carries on a business of providing, for a fee, areas available for use by a member of the public in parking a motor vehicle for a continuous period of 6 hours or more within the period from 7 am to 7 pm

    “parking space means an area for parking 1 motor vehicle

    “pool parking space means a parking space that on the day is not allocated by the employer to—

    • “(a) the sole use of an employee; or

    • “(b) the sole use of persons other than an employee

    “pool parking user means an employee of the employer who on the day may park a motor vehicle in a pool parking space.

    “Defined in this Act: associated, business, business or certificated vehicle, commercial car park operator, employee, employer, employment, employment income, fringe benefit, motor vehicle, parking space, pool parking space, pool parking user, private use, work-related vehicle”.

13B Section CX 23 amended (Benefits provided on premises)

• In section CX 23(1), words before paragraph (a), replace “accommodation” with “accommodation, parking for a motor vehicle”.

13C Section CX 25 amended (Benefits provided by charitable organisations)

• (1) Replace section CX 25(2), other than the heading, with:

  • “(2) Subsection (1) does not apply, and the benefit provided is a fringe benefit, if a charitable organisation provides a benefit to an employee by way of short-term charge facilities and the value of the benefit from the short-term charge facilities for the employee in a tax year is more than the lesser for the tax year of—

    • “(a) 5% of the employee's salary or wages:

    • “(b) $1,200.”

  (2) Replace section CX 25(3)(a) and (b) with:

  • “(a) enables an employee to obtain goods or services that have no connection with the employer or its operations by—

    • “(i) buying or hiring the goods or services:

    • “(ii) charging the cost of the goods or services to an account:

    • “(iii) providing consideration other than money or money's worth for the goods or services; and

  • “(b) places on the employer the liability for some or all of the payment or other consideration for the goods or services; and”.

  (3) In section CX 25, list of defined terms, insert “employer”, “salary or wages”, and “tax year”.

13D Section CX 28B inserted (Parking for motor vehicles not within section CX 9B)

• After section CX 28, insert:

  “CX 28B Parking for motor vehicles not within section CX 9B

  • A benefit in the form of the availability of an area for parking a motor vehicle is not a fringe benefit except under section CX 9B.

    “Defined in this Act: fringe benefit”.

17B Sections DB 20B and DB 20C inserted

• (1) After section DB 20, insert:

  “DB 20B Consideration for agreement to grant, renew, extend, or transfer leasehold estate or licence

  • “When this section applies

    “(1) This section applies when—

    • “(a) a person (the payer) incurs an amount of expenditure as consideration for the agreement by another person (the payee) to the grant, renewal, extension, or transfer of a right (the land right) that is a leasehold estate, or a licence to use land; and

    • “(b) the payer is the person who owns—

      • “(i) the land right:

      • “(ii) the estate in land from which the land right is granted; and

    • “(c) the payee is the person who is obtaining the land right.

    “Deduction

    “(2) The payer is allowed a deduction for the amount.

    “Relationship with subpart DA

    “(3) This section overrides the capital limitation. The general permission must still be satisfied and the other general limitations still apply.

    “Defined in this Act: amount, capital limitation, deduction, depreciable intangible property, estate, general limitation, general permission, land, leasehold estate, own

  “DB 20C Consideration for agreement to surrender leasehold estate or licence

  • “When this section applies

    “(1) This section applies when—

    • “(a) a person (the payer) incurs an amount of expenditure as consideration for the agreement by another person (the payee) to the surrender of a leasehold estate or the termination of a licence to use land; and

    • “(b) the payer is a person who owns the leasehold estate or licence or the estate in land from which the leasehold estate or licence is granted; and

    • “(c) the payee is a person who owns the leasehold estate or licence or the estate in land from which the leasehold estate or licence is granted.

    “Deduction

    “(2) The payer is allowed a deduction for the amount.

    “Relationship with subpart DA

    “(3) This section overrides the capital limitation. The general permission must still be satisfied and the other general limitations still apply.

    “Defined in this Act: amount, capital limitation, deduction, estate, general limitation, general permission, land, leasehold estate, own”.

  (2) Subsection (1) applies to an amount that is—

  • (a) incurred on or after 1 April 2013; and

  • (b) not incurred as consideration for the agreement, before 1 April 2013, to a lease of land, or a licence to use land.

25B Section EA 3 amended (Prepayments)

• (1) After section EA 3(2)(d), insert:

  • “(db) a leasehold estate, or licence to use land, to which section EI 4B (Consideration for agreement to grant, renew, extend, or transfer leasehold estate or licence) applies:”.

  (2) In section EA 3, list of defined terms, insert “land” and “leasehold estate”.

31B Section EE 7 amended (What is not depreciable property?)

• (1) In section EE 7(a), replace “land” with “land other than depreciable intangible property”.

  (2) Replace section EE 7(e) with:

  • “(e) excepted financial arrangements other than depreciable intangible property:”.

  (3) In section EE 7, list of defined terms, insert “depreciable intangible property” and “land”.

  (4) Subsections (1) and (2) apply for the 2008–09 and later income years.

32B Section EI 4B inserted (Consideration for agreement to grant, renew, extend, or transfer leasehold estate or licence)

• (1) After the heading following section EI 4, insert:

  “EI 4B Consideration for agreement to grant, renew, extend, or transfer leasehold estate or licence

  • “When this section applies

    “(1) This section applies when a person, in an income year, derives an amount that is income under section CC 1B (Consideration for agreement to grant, renew, extend, or transfer leasehold estate or licence), or incurs an amount of expenditure that is allowed as a deduction under section DB 20B (Consideration for agreement to grant, renew, extend, or transfer leasehold estate or licence), and the amount is incurred or derived—

    • “(a) in relation to a right (the land right) that is a leasehold estate or a licence to use land and may be terminated, or expires if not extended or renewed, after a period (the spreading period) beginning with the later of the commencement and the most recent renewal or extension; and

    • “(b) in relation to the spreading period.

    “Exception for amount of income under section CC 1 or CG 8

    “(2) This section does not apply to an amount that is income under section CC 1 or CG 8 (which relate to income from land or capital contributions).

    “Timing of income and deductions for land right with spreading period

    “(3) If the amount is incurred or derived—

    • “(a) before the end of the spreading period, the amount is allocated in equal portions to each income year that—

      • “(i) includes part of the spreading period; and

      • “(ii) ends after the amount is incurred or derived; and

      • “(iii) ends within 50 years from the beginning of the spreading period; and

    • “(b) at or after the end of the spreading period, the amount is allocated to the income year in which it is incurred or derived.

    “Effect for income of person ceasing to have estate in land

    “(4) If an amount of income would be allocated to a spreading period of a land right under subsection (3) for a person in the absence of this subsection, the amount is allocated to an income year (the balance year) ending before the end of the spreading period, if—

    • “(a) at the beginning of the balance year, the person holds the land right, or the estate in land from which the land right is granted; and

    • “(b) in the balance year, the person ceases to hold the land right, or the estate in land from which the land right is granted; and

    • “(c) the amount would be allocated under subsection (3) to an income year—

      • “(i) ending before, or including, the end of the spreading period; and

      • “(ii) after the balance year.

    “Effect for deduction of person ceasing to have leasehold estate or licence

    “(5) If an amount of a deduction would be allocated to a spreading period of a land right under subsection (3) for a person (the affected person) in the absence of this subsection, the amount is allocated to an income year (the balance year) ending before the end of the spreading period, if—

    • “(a) at the beginning of the balance year, either or both of the land right and the estate in land from which the land right is granted are held by the affected person or a person associated with the affected person; and

    • “(b) at the end of the balance year, neither of the land right and the estate in land from which the land right is granted are held by the affected person or a person associated with the affected person; and

    • “(c) the amount would be allocated under subsection (3) to an income year—

      • “(i) ending before, or including, the end of the spreading period; and

      • “(ii) after the balance year.

    “Relationship between subsections

    “(6) Subsections (4) and (5) override subsection (3).

    “Defined in this Act: amount, associated, deduction, estate, income, income year, land, leasehold estate, own”.

  (2) Subsection (1) applies to an amount that is—

  • (a) incurred or derived on or after 1 April 2013; and

  • (b) not incurred or derived as consideration for the agreement, before 1 April 2013, to a lease of land or a licence to use land.

33B New section EW 32B inserted (Consideration in transfer or defeasance of short-term agreement for sale and purchase treated as financial arrangement)

• (1) After section EW 32, insert:

  “EW 32B Consideration in transfer or defeasance of short-term agreement for sale and purchase treated as financial arrangement

  • “When this section applies

    “(1) This section applies for a short-term agreement for sale and purchase (the agreement) when—

    • “(a) a person (the transferor) with an interest in the agreement transfers the interest to, or makes a legal defeasance of the interest for the benefit of, another person (the transferee); and

    • “(b) a transferor or transferee (the opting party) chooses under section EW 8 to treat the agreement as a financial arrangement.

    “Consideration

    “(2) For the opting party, the amount of consideration for the transfer or defeasance that is included in the calculation and allocation of an amount for each income year over the agreement's term, and in the calculation of the base price adjustment for the agreement, is limited to the amount of consideration for the transfer or defeasance that relates to a sale or purchase, under the agreement, occurring before the transfer or defeasance.

    “Defined in this Act: amount, base price adjustment, consideration, financial arrangement, income, legal defeasance, short-term agreement for sale and purchase”.

  (2) Subsection (1) applies for a person and a short-term agreement for sale and purchase, except if the person takes a tax position for the short-term agreement for sale and purchase, relying on the provisions of subpart EW as they were before the amendment made by subsection (1),—

  • (a) in a return of income received by the Commissioner before 27 September 2012:

  • (b) under a determination or binding ruling made by the Commissioner before 27 September 2012.

34B New heading and sections EZ 64 to EZ 68 inserted

• After section EZ 63, insert:

  “Restructuring under New Zealand Railways Corporation Restructuring Act 1990

  “EZ 64 New Zealand Railways Corporation restructure: purpose and initial amounts for tax purposes

  • “Purpose

    “(1) The purpose of this section, sections CW 65, EZ 65 to EZ 67, and YC 18C (which relate to the New Zealand Railways Corporation restructure) is to ensure that the Railways vesting gives rise to no tax consequences other than those necessary to account for the vesting of the Railways assets and liabilities from a public authority to a state enterprise. The treatments of KiwiRail Holdings Limited, New Zealand Railways Corporation, and associated companies in those sections also applies for the purposes of the Tax Administration Act 1994.

    “Depreciation

    “(2) For a Railways asset that is depreciable property, KiwiRail Holdings Limited calculates, on and after 31 December 2012, depreciation recovery income and deductions for amounts of depreciation loss as if KiwiRail Holdings Limited had acquired the asset on 31 December 2012 for the amount recorded in a schedule prepared by KiwiRail Holdings Limited for the purposes of this section.

    “Financial arrangements: consideration

    “(3) KiwiRail Holdings Limited is treated as––

    • “(a) paying an amount of consideration, for a Railways asset that is a financial arrangement, equal to the amount recorded in KiwiRail Holdings Limited's financial accounts for that arrangement on 31 December 2012:

    • “(b) being paid an amount of consideration, for a Railways liability that is a financial arrangement, equal to the amount recorded in KiwiRail Holdings Limited's financial accounts for that arrangement on 31 December 2012.

    “Financial arrangements: overrides

    “(4) Sections EW 38, EW 42, and GB 21 (which relate to financial arrangements) do not apply for the Railways vesting.

    “Defined in this Act: amount, assessable income, associate, company, consideration, depreciation loss, depreciable property, depreciation recovery income, financial arrangement, pay, public authority, Railways assets and liabilities, Railways vesting, state enterprise

  “EZ 65 Expenditure or loss incurred, and amounts derived

  • “Expenditure or loss incurred, and amounts derived

    “(1) KiwiRail Holdings Limited and New Zealand Railways Corporation are treated as the same person for the period prior to and including 31 December 2012 for the purpose of determining the following:

    • “(a) whether a deduction is allowed for an amount of expenditure or loss incurred by KiwiRail Holdings Limited in connection with the Railways assets or liabilities:

    • “(b) the amount of any deduction of KiwiRail Holdings Limited in connection with the Railways assets or liabilities:

    • “(c) whether an amount derived by KiwiRail Holdings Limited in connection with the Railways assets or liabilities is income:

    • “(d) the amount of any income of KiwiRail Holdings Limited in connection with the Railways assets or liabilities.

    “Treatment of New Zealand Railways Corporation

    “(2) For the purposes of subsection (1), New Zealand Railways Corporation is treated as if it was a company that was not a public authority.

    “Defined in this Act: amount, company, deduction, income, public authority, Railways assets and liabilities

  “EZ 66 Prepayments

  • “Deduction

    “(1) KiwiRail Holdings Limited has, for the 2012–13 income year, a deduction under section DB 50 (Adjustment for prepayments) for an unexpired portion that is connected with a Railways asset or liability, as described in subsection (2).

    “Unexpired portion

    “(2) For the purposes of subsection (1), the unexpired portion is the unexpired portion that New Zealand Railways Corporation would have had by applying section EA 3(4) to (7) (Prepayments) on 30 December 2012 to an amount of expenditure incurred by New Zealand Railways Corporation in connection with a Railways asset or liability, treating––

    • “(a) 30 December 2012 as the end of an income year; and

    • “(b) New Zealand Railways Corporation as a taxpayer with a deduction for the expenditure, if that expenditure is described in section EA 3(1).

    “Future application of section EA 3

    “(3) For the 2012–13 income year and later income years, section EA 3 applies to KiwiRail Holdings Limited as if it had been allowed a deduction for expenditure to which subsection (1) applies.

    “Defined in this Act: deduction, income year, Railways asset, Railways liability, taxpayer

  “EZ 67 Leased assets

  • “Allocation of expenditure

    “(1) KiwiRail Holdings Limited calculates, for the 2012–13 income year, an expenditure allocation under section EJ 10 (Personal property lease payments) for a personal property lease payment that is connected with a Railways asset or liability as if 31 December were the start of the 2012–13 income year.

    “Future application of section EJ 10

    “(2) For the 2013–14 income year and later income years, section EJ 10 applies to KiwiRail Holdings Limited as if, for the period up to and including 31 December 2012, New Zealand Railways Corporation and KiwiRail Holdings Limited were the same person.

    “Defined in this Act: deduction, income year, personal property lease payment, Railways assets and liabilities

  “EZ 68 Definitions

  • In sections EZ 64 to EZ 67,––

    “asset,––

    • “(a) means property of any kind, whether or not situated in New Zealand, whether tangible or intangible, real or personal, corporeal or incorporeal, and whether or not subject to rights; and

    • “(b) includes––

      • “(i) land, including legal and equitable rights of occupation of land or buildings:

      • “(ii) buildings, vehicles, plant equipment, machinery, fixtures and fittings, and legal and equitable rights in them:

      • “(iii) choses in action and money:

      • “(iv) legal and equitable rights of any kind, and applications, objections, submissions, and appeals in respect of those rights:

      • “(v) intellectual property and applications pending for intellectual property:

      • “(vi) goodwill, and any business undertaking

    “legal and equitable rights includes all rights, powers, privileges, interests, leases, licences, approvals, consents, designations, permissions, dispensations, authorisations, benefits, defences, immunities, claims, and equities of any kind, whether arising from, accruing under, created or evidenced by, or the subject of, an instrument or otherwise, and whether liquidated or unliquidated, actual, contingent, or prospective

    “liabilities means liabilities, debts, charges, duties, and obligations of every description, whether present or future, actual or contingent, and whether payable or to be observed or performed in New Zealand or elsewhere

    “Railways assets and liabilities, means assets and liabilities, or parts of assets and liabilities, as the case may be, specified in an Order in Council made under the New Zealand Railways Corporation Restructuring Act 1990, and Railways assets and Railways liabilities have corresponding meanings

    “Railways vesting means the vesting of the Railways assets and liabilities in KiwiRail Holdings Limited on 31 December 2012 in accordance with the New Zealand Railways Corporation Restructuring Act 1990.

    “Defined in this Act: asset, land, legal and equitable rights, liabilities, New Zealand, Railways assets and liabilities, Railways vesting”

34C Section FM 31 amended (Eligibility rules)

• In section FM 31(1)(g), replace “subsections (5) and (6) do not” with “subsection (6) does not”.

34D Section FN 4 amended (Eligibility rules)

• In section FN 4(1)(g), replace “subsections (4) and (5) do not” with “subsection (5) does not”.

34E Section GB 24 amended (Exemption for genuine contracts)

• Replace section GB 24(2)(h) with:

  • “(h) no part of the income or share of profits derived by the relative, or company of which the relative is a shareholder or director, is either a disposition without fully adequate consideration in money or money's worth passing to the person making the disposition or a disposition that any part of does not have fully adequate consideration in money or money's worth passing to the person making the disposition.”

36B Section HG 2 amended (Partnerships are transparent)

• In section HB 2, in the list of defined terms, delete “rebate”.

36C Section HG 3 amended (General provisions relating to disposals)

• After section HG 3(3), insert as a list of defined terms “entering partner, exiting partner, partner, partnership, return of income, small partnership”.

36D Section HM 19C amended (Modified rules for foreign investment variable-rate PIEs)

• (1) In section HM 19C(1), replace “HM 11(a) and (d)”“” with “HM 11(1)(a) and (b)”.

  (2) In section HM 19C(2), replace “HM 12(a) and (b)(v)” with “HM 12(1)(a) and (b)(v)”.

36E Section LA 6 amended (Remaining refundable credits: PAYE, RWT, and certain other items)

• In section LA 6, in the compare note, delete “LH 1(6)”.

36F Section LH 17 amended (Some definitions)

• In section LH 17, in the list of defined terms, insert “associated internal software developer”.

37B Section LP 2 amended (Tax credits for supplementary dividends)

• In section LP 2(7), insert as a subsection heading “Relationship with section OZ 12”.

37C Section LP 5 amended (Application of benchmark dividend rules and imputation credit ratio)

• In section LP 5(3), insert as a subsection heading “Relationship with section OZ 12”.

37D Section LP 8 amended (Relationship with exempt income rules)

• In section LP 8(5), insert as a subsection heading “Relationship with section OZ 12”.

39B Section MB 7B inserted (Family scheme income from employment benefits—employees not controlling shareholders)

• After section MB 7, insert:

  “MB 7B Family scheme income from employment benefits—employees not controlling shareholders

  • “When this section applies

    “(1) This section applies for the purpose of determining the amount that represents the family scheme income of a person to whom section MB 8 does not apply for an income year when the person has an employer who makes available—

    • “(a) an area for parking a motor vehicle for the person's private use when, under the terms of the person's employment, the employee would be entitled to a greater amount of employment income should the person choose, or have chosen, not to receive the benefit of the area for parking:

    • “(b) a motor vehicle for the person's private use when, under the terms of the person's employment, the person would be entitled to a greater amount of employment income should the person choose, or have chosen, not to receive the benefit of the motor vehicle:

    • “(c) a short-term charge facility as defined in section CX 25(3) (Benefits provided by charitable organisations).

    “What is included in family scheme income

    “(2) The person's family scheme income for the income year includes an amount equal to the total for the person and the income year of amounts, each of which is—

    • “(a) the amount by which the employment income of the person would be greater in the absence of a benefit referred to in subsection (1)(a) and (b):

    • “(b) the value, including fringe benefit tax, of a fringe benefit provided to the person under a short-term charge facility referred to in subsection (1)(c), if the total value of such fringe benefits, not including fringe benefit tax, provided in the income year is more than the lesser for the income year of—

      • “(i) 5% of the employee's salary or wages:

      • “(ii) $1,200.

    “Defined in this Act: amount, employee, employer, employment, employment income, family scheme income, fringe benefit, fringe benefit tax, income year, motor vehicle, private use, salary or wages, short-term charge facility”.

39C Section MB 8 amended (Family scheme income from fringe benefits)

• In section MB 8, replace the heading with “Family scheme income from fringe benefits—controlling shareholders”.

39D Section MD 16 amended (Calculation of parental tax credit abatement)

• In section MD 16, delete the compare note.

44B Sections RD 33B and RD 33C inserted

• After section RD 33, insert:

  “RD 33B Parking for motor vehicles

  • “Value of fringe benefit arising from availability of parking space

    “(1) The daily value of a fringe benefit arising under section CX 9B (Some parking for motor vehicles) from the availability of a parking space to an employee is,—

    • “(a) if the parking space is provided by a commercial car park operator, the part corresponding to 1 day, treating a month as having 30 days and a year as having 360 days, of the amount charged to the employer by the commercial car park operator for the parking space; or

    • “(b) if paragraph (a) does not apply and a daily amount is set by a determination of the Commissioner under section 91AAT of the Tax Administration Act 1994 for the part of the city in which the parking space is provided, the amount set by the determination; or

    • “(c) if paragraphs (a) and (b) do not apply and the employee would be, or would have been, entitled to an increase in the employee's employment income, should the employee choose, or have chosen, not to receive the benefit of the parking space, the amount of that increase for 1 day after deduction of tax at the highest rate in schedule 1, part A, table 1 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits) applicable to the person in the income year.

    “Value of fringe benefit arising from availability of fraction of parking space

    “(2) The value of a fringe benefit arising from the availability to an employee of a fraction, as determined under section CX 9B(4)(c), of a parking space is calculated by multiplying the fraction by the value given by subsection (1) for a fringe benefit arising from the availability of 1 parking space.

    “Use of results from parking test period

    “(3) An employer who chooses to have a parking test period under section RD 33C and obtain, for the application of section CX 9B(4), daily average figures for the number of pool parking spaces, the number of pool parking users, the number of business or certificated vehicles, and the value of the item day users, must use the results for each day in the term given by that section.

    “Relationship with section RD 41

    “(4) This section overrides section RD 41, except for an employer who is a commercial car park operator.

    “Defined in this Act: amount, Commissioner, business or certificated vehicle, commercial car park operator, employee, employer, employment, employment income, fringe benefit, income year, motor vehicle, parking space, pool parking space, pool parking user, salary or wages, tax

  “RD 33C Parking test period

  • “Recording details for test period

    “(1) To obtain for the application of section CX 9B(4) (Some parking for motor vehicles) for a day, the average number of pool parking spaces, the average number of pool parking users, the average number of business or certificated vehicles, and the average value of the item day users, an employer may choose to record the details of the use of parking spaces by employees for a test period.

    “Minimum of 2 months for test period

    “(2) The test period must be a continuous period of 2 months or more—

    • “(a) beginning on the first day of a quarter, if the employer pays FBT quarterly or annually; or

    • “(b) in an income year, if the employer pays FBT on an income year basis.

    “Period showing pattern of use

    “(3) The employer must—

    • “(a) choose a test period that shows, or is likely to show, a pattern of use of the parking spaces that fairly represents the use over the whole of the term given by subsection (4); and

    • “(b) keep a daily record for the test period of—

      • “(i) the number of parking spaces; and

      • “(ii) the number of parking spaces allocated to individual employees who are entitled to use the allocated parking space for a motor vehicle other than a business or certificated vehicle; and

      • “(iii) the number of parking spaces allocated to individual employees who are restricted to using the allocated parking space for a business or certificated vehicle; and

      • “(iv) the number of parking spaces allocated to the sole use of persons other than an employee; and

      • “(v) the number of pool parking users; and

      • “(vi) the number of pool parking users who are entitled to use a pool parking space for a motor vehicle other than a business or certificated vehicle, and whose hours of employment on the day both begin and end in the period from 6 am to 10 pm; and

      • “(vii) the number of pool parking users who are not entitled to use a pool parking space for a motor vehicle other than a business or certificated vehicle, and whose hours of employment on the day both begin and end in the period from 6 am to 10 pm.

    “Term of 3 years or shorter period advised to Commissioner

    “(4) The quantities (the test quantities) obtained for the application of section CX 9B from a test period apply for a term of 3 years, or for a shorter period chosen under subsection (5), starting—

    • “(a) on the first day of the test period, if the employer pays FBT quarterly; or

    • “(b) on the first day of the tax year in which the test period occurs, if the employer pays FBT annually; or

    • “(c) on the first day of the income year in which the test period occurs, if the employer pays FBT on an income year basis.

    “Employer may end term

    “(5) The employer may choose a term ending on a date that is the last day of a particular period (a return period) for which the employer makes a return for fringe benefit tax, and is before the end of the 3-year period referred to in subsection (4) for a test period, and the employer must not use the test quantities after that date.

    “When test period no longer representative

    “(6) The employer must not continue to use the test quantities after—

    • “(a) the end of a return period in which the value for the test period of the number of pool parking spaces or the number of pool parking users, whichever is the lesser for the test period, is exceeded for the return period by 10% of that value or more:

    • “(b) a date specified by the Commissioner in a notice informing the employer that the Commissioner considers the test quantities do not fairly represent the use of parking spaces.

    “Defined in this Act: business or certificated vehicle, Commissioner, employee, employer, employment, FBT, fringe benefit tax, income year, motor vehicle, parking space, pool parking space, pool parking user, quarter, tax year”.

44C Section RD 39 amended (Benefits provided by charitable organisations)

• (1) After section RD 39(1)(a), insert:

  • “(ab) the amount that the organisation pays for or towards consideration, other than money or money's worth, for goods and services obtained by the employee under the short-term charge facility:”.

  (2) In section RD 39(1)(b), after “goods and services”, insert “or obtaining other consideration for the goods and services”.

  (3) In section RD 39(2)(c), after “no more than”, insert “the lesser of $1,200 and”.

  (4) In section RD 39(3), after “more than”, insert “the lesser of $1,200 and”.

  (5) In section RD 39(4), replace “paragraph (a) or (b)” with “of paragraph (a) and (b)”.

44D Section RD 47 amended (Attribution of certain fringe benefits)

• (1) After section RD 47(1)(a), insert:

  • “(ab) making available an area for parking a motor vehicle for an employee's private use under section CX 9B (Some parking for motor vehicles):”.

  (2) In section RD 47, list of defined terms, insert “parking space”.

44E Section RD 48 amended (When attributed benefits provided to more than 1 employee)

• (1) After the heading to section RD 48, as the heading to subsection (1), insert “Attribution or pooling of benefits”.

  (2) After section RD 48(1), insert:

  “Exception for parking spaces

  • “(2) For a fringe benefit arising under section CX 9B (Some parking for motor vehicles),—

    • “(a) subsection (1) does not apply:

    • “(b) the employer may pool, under section RD 53, a fringe benefit valued under section CX 9B(3)(d) if all the employees have the same or a similar entitlement to the fringe benefit.”

44F Section RD 54 amended (Value of and payments towards fringe benefits)

• In section RD 54(2), replace “the amount paid” with “the lesser of the value of the benefit and the amount paid”.

• (1A) Repeal the definition of accident compensation payment for attendant care.

• (1B) In the definition of asset, in paragraph (b), replace “mining)” with“ mining):”, and insert:

  • “(c)  is defined in section EZ 68 (Definitions) for the purposes of sections EZ 64 to EZ 67 (which relate to New Zealand Railways Corporation restructure)”.

• (5B) Insert, in appropriate alphabetical order:

  “business or certificated vehicle is defined in section CX 9B (Some parking for motor vehicles)”.

• (8B) Insert, in appropriate alphabetical order:

  “commercial car park operator is defined in section CX 9B (Some parking for motor vehicles)”.

• (19B) In the definition of land provisions, after paragraph (b), insert:

  • “(bb) section EI 4B (Consideration for agreement to grant, renew, extend, or transfer leasehold estate or licence):”.

• (19C) Insert, in appropriate alphabetical order:

  “legal and equitable rights is defined in section EZ 68 (Definitions) for the purposes of sections EZ 64 to EZ 67 (which relate to New Zealand Railways Corporation restructure)”.

• (19D) Insert, in appropriate alphabetical order:

  “liabilities is defined in section EZ 68 (Definitions) for the purposes of sections EZ 64 to EZ 67 (which relate to New Zealand Railways Corporation restructure)”.

• (23B) In the definition of ownership interest, replace “section YC 18B (Corporate reorganisations” with “sections YC 18B and YC 18C (which relate to corporate restructurings”.

• (23C) Insert, in appropriate alphabetical order:

  “parking space is defined in section CX 9B (Some parking for motor vehicles)”.

• (23D) Insert, in appropriate alphabetical order:

  “pool parking space is defined in section CX 9B (Some parking for motor vehicles)”.

• (23E) Insert, in appropriate alphabetical order:

  “pool parking user is defined in section CX 9B (Some parking for motor vehicles)”.

• (25B) Insert, in appropriate alphabetical order:

  “Railways assets is defined in section EZ 68 (Definitions) for the purposes of sections EZ 64 to EZ 67 (which relate to New Zealand Railways Corporation restructure)”.

• (25C) Insert, in appropriate alphabetical order:

  “Railways assets and liabilities is defined in section EZ 68 (Definitions) for the purposes of sections EZ 64 to EZ 67 (which relate to New Zealand Railways Corporation restructure)”.

• (25D) Insert, in appropriate alphabetical order:

  “Railways liabilities is defined in section EZ 68 (Definitions) for the purposes of sections EZ 64 to EZ 67 (which relate to New Zealand Railways Corporation restructure)”.

• (25E) Insert, in appropriate alphabetical order:

  “Railways vesting is defined in section EZ 68 (Definitions) for the purposes of sections CW 65, EZ 64 to EZ 67, and YC 18C (which relate to the New Zealand Railways Corporation restructure)”.

57B New section YC 18C inserted (Railways restructure not affecting Crown economic ownership)

• After section YC 18B, insert:

  “YC 18C Railways restructure not affecting Crown economic ownership

  • “When this section applies

    “(1) This section applies for New Zealand Railways Corporation, KiwiRail Holdings Limited, and any company that, immediately after the Railways vesting, is in the same wholly-owned group as KiwiRail Holdings Limited for the purposes of the tests of ownership and control in:

    • “(a) Parts I and O (which relate to losses and memorandum accounts):

    • “(b) the consolidation rules:

    • “(c) the amalgamation rules.

    “Loss balance, credit account, and restructuring continuity

    “(2) Starting from when New Zealand Railways Corporation is first treated as having a notional single person under section YC 5, KiwiRail Holdings Limited is treated as––

    • “(a) existing and having the same notional single person under section YC 5 that KiwiRail Holdings Limited has immediately after the Railways vesting:

    • “(b) holding the ownership interests in other companies that New Zealand Railways Corporation held before the Railways vesting.

    “No notice requirement for joining consolidated group

    “(3) KiwiRail Holdings Limited may choose to join an existing consolidated group on and after 31 December 2012, despite section FM 38 (Notice requirements on forming or joining consolidated group).

    “Effect of subsection (2)

    “(4) Subsection (2) does not prevent a change in shareholders, notional single person, the holdings of ownership interests, or other circumstances occurring after the Railways vesting.

    “Definitions

    “(5) In this section,––

    “ownership interest has the same meaning as in section YC 18(6)

    “Railways vesting has the same meaning as in section EZ 68 (Definitions).

    “Defined in this Act: amalgamation rules, consolidation rules, consolidated group, ownership interest, Railways vesting, shareholder, wholly-owned group”.

67B Section 46F inserted (Statements for short-term charge facilities to employees)

• After section 46E, insert:

  “46F Statements for short-term charge facilities to employees

  • “(1) An employer who provides a short-term charge facility to an employee in a tax year must provide to the employee for the employee's corresponding income year a statement—

    • “(a) giving the details required by subsection (2); and

    • “(b) within the time required by subsection (3).

    “(2) The statement required by subsection (1) must include—

    • “(a) the total value of benefits (the FBT benefit value), including fringe benefit tax, received by the employee from short-term charge facilities in the income year; and

    • “(b) the total value of benefits (the pre-FBT benefit value), not including fringe benefit tax, received by the employee from short-term charge facilities in the income year; and

    • “(c) the amount under section MB 7B(2) of the Income Tax Act 2007 that, if exceeded by the pre-FBT benefit value, results in the FBT benefit value being included in the employee's family scheme income for the income year; and

    • “(d) for each short-term charge facility provided to the employee—

      • “(i) the type of short-term charge facility:

      • “(ii) the period in the income year during which the short-term charge facility was available to the employee:

      • “(iii) the value, including fringe benefit tax, of the benefits received by the employee from the short-term charge facility in the period.

    “(3) The statement required by subsection (1) must be provided to the employee by the 20 May that follows the income year.”

67C Heading and section 91AAT inserted (Determinations relating to value of fringe benefits from parking spaces)

• After section 91AAS, insert:

  “Determinations relating to fringe benefits

  “91AAT Determinations relating to value of fringe benefits from parking spaces

  • “(1) For the purposes of sections CX 9B and RD 33B of the Income Tax Act 2007, the Commissioner may determine the value of a fringe benefit arising from the availability to an employee of a parking space in an urban area defined in section CX 9B(5) of that Act or by an Order in Council under that section.

    “(2) In determining the value of a fringe benefit, the Commissioner must take into account the market rates of fees for hiring parking spaces in the urban area.

    “(3) A determination may be made for a period specified in the determination.

    “(4) A determination may provide for the extension, limitation, variation, cancellation, or revocation of an earlier determination.

    “(5) Within 30 days of issuing or changing a determination under this section, the Commissioner must publish a notice in a publication chosen by the Commissioner that—

    • “(a) gives notice of the issue or change of the determination; and

    • “(b) states where copies of the determination can be obtained.”

67D Section 91C amended (Taxation laws in respect of which binding rulings may be made)

• (1) In section 91C(1)(f), in the words before the subparagraphs, replace “(a) to (eb)” with “(a) to (ec)”.

  (2) In section 91C(1)(f)(i), replace “(e) or (eb)” with “(e), (eb), or (ec)”.

• (2) In section 2(1), insert, in appropriate alphabetical order:

  “Railways assets and liabilities, Railways assets, and Railways liabilities have the same meaning as in section EZ 68 of the Income Tax Act 2007”.

• (3) In section 2(1), insert, in appropriate alphabetical order:

  “Railways vesting has the same meaning as in section EZ 68 of the Income Tax Act 2007”.

94B New section 78G (Railways vesting: zero rating and timing of tax calculations and documents)

• After section 78F, insert:

  “78G Railways vesting: zero rating and timing of tax calculations and documents

  • “(1) The Railways vesting is treated as being a taxable supply, on 31 December 2012, of the Railways assets and liabilities, that is charged with tax at the rate of 0%.

    “(2) For the purpose of calculating the amount of tax payable, or input tax deductible, on or after 31 December 2012 by KiwiRail Holdings Limited in respect of, or in relation to, a Railways asset or a Railways liability, KiwiRail Holdings Limited and New Zealand Railways Corporation are treated as if they were the same person in respect of the period up to and including 31 December 2012, subject to subsection (1).

    “(3) If it is necessary for a tax invoice, a credit note, or a debit note (the document) to be issued by or to New Zealand Railways Corporation in respect of a supply made by or to New Zealand Railways Corporation on or before 31 December 2012, the document may be issued by or to KiwiRail Holdings Limited if the supply was in respect of or in relation to Railways assets and liabilities. New Zealand Railways Corporation and KiwiRail Holdings Limited are treated as if, in relation to that supply, they were the same person for the purposes of any requirement that New Zealand Railways Corporation holds, has previously been issued with, or has issued to a person, a tax invoice, a debit note, or a credit note for the supply.

    “(4) If a document purporting to be a tax invoice, a credit note, or a debit note (the issued document) is issued by or to New Zealand Railways Corporation in respect of a supply that is made by or to KiwiRail Holdings Limited on or after 31 December 2012, the issued document is treated as if it is a tax invoice, a credit note, or a debit note, as appropriate, that is issued by or to KiwiRail Holdings Limited, if the supply is in respect of or in relation to Railways assets and liabilities.”

105B Section EE 7 amended (What is not depreciable property?)

• (1) Replace section EE 7(e) with:

  • “(e) excepted financial arrangements other than depreciable intangible property:”.

  (2) Subsection (1) applies for the 2005–06 and later income years.

Other remedial matters

111 Deletion of redundant LAQC legislation

• The items in column 2 of schedule 1 are deleted or repealed from the locations in column 1 of schedule 1.

Schedule 1 Deletion of redundant LAQC legislation

s 111

Location	Delete / Repeal
section DS 4 of the Income Tax Act 2007	section DS 4(5)
section DS 4 of the Income Tax Act 2007, the list of defined terms	the words “loss-attributing qualifying company”
section FM 31 of the Income Tax Act 2007	section FM 31(5)
section FM 31 of the Income Tax Act 2007, the list of defined terms	the word “LAQC,”
section FN 4 of the Income Tax Act 2007	section FN 4(4)
section FN 4 of the Income Tax Act 2007, the list of defined terms	the word “LAQC,”
section FO 3(1) of the Income Tax Act 2007	section FO 3(1)(e)
section FO 3 of the Income Tax Act 2007	section FO 3(3)
section FO 3 of the Income Tax Act 2007, the list of defined terms	the word “LAQC,”
section GB 6(1)(c) of the Income Tax Act 2007	the words “and loss-attributing qualifying companies (LAQC)”
section GB 45(2) of the Income Tax Act 2007	section GB 45(2)(b)
section GB 45 of the Income Tax Act 2007, the list of defined terms	the word “LAQC,”
section GB 46(1)(c) of the Income Tax Act 2007	section GB 46(1)(c)
section GB 46(1)(e) of the Income Tax Act 2007	the words “, excluding an LAQC that has a tax loss from the arrangement for the income year,”
section GB 46(3)(b)(ii) of the Income Tax Act 2007	the words “who is not an LAQC and”
section GB 46(6)(a) of the Income Tax Act 2007	section GB 46(6)(a)(ii)
section GB 46 of the Income Tax Act 2007, the list of defined terms	the word “LAQC,”
section GB 47(2) of the Income Tax Act 2007	section GB 47(2)(c)
section GB 47 of the Income Tax Act 2007, the list of defined terms	the word “LAQC,”
section GB 48(1) of the Income Tax Act 2007	section GB 48(1)(a)
section GB 48 of the Income Tax Act 2007, the list of defined terms	the word “LAQC,”
Subpart HA of the Income Tax Act 2007, the heading	the words “and loss-attributing qualifying companies (LAQC)”
section HA 1 of the Income Tax Act 2007	section HA 1(3)
section HA 1(5) of the Income Tax Act 2007	the words “or a loss-attributing qualifying company”
section HA 1 of the Income Tax Act 2007, the list of defined terms	the words “loss-attributing qualifying company”
section HA 4(1) of the Income Tax Act 2007	the words “and LAQCs”
section HA 4 of the Income Tax Act 2007, the list of defined terms	the word “LAQC”
section HA 5(1) of the Income Tax Act 2007	the words “or an LAQC”
section HA 5 of the Income Tax Act 2007, the list of defined terms	the word “LAQC,”
section HA 6(2) of the Income Tax Act 2007	section HA 6(2)(c)
section HA 6 of the Income Tax Act 2007, the list of defined terms	the word “LAQC,”
section HA 11 of the Income Tax Act 2007, the list of defined terms	the word “LAQC,”
section HA 11B of the Income Tax Act 2007	section HA 11B
section HA 12 of the Income Tax Act 2007	section HA 12
section IA 7 of the Income Tax Act 2007	section IA 7(2)
section IA 7 of the Income Tax Act 2007, the list of defined terms	the words “LAQC, loss-attributing qualifying company,”
section MB 1 of the Income Tax Act 2007	section MB 1(4)
section MB 1 of the Income Tax Act 2007, the list of defined terms	the word “LAQC,”
section YA 1 of the Income Tax Act 2007, the definition of market value interest, paragraph (b)	the words “and loss attributing qualifying companies (LAQC)”
section YA 1 of the Income Tax Act 2007, the definition of shareholder, paragraph (c)	the words “and loss attributing qualifying companies (LAQC)”
section YA 1 of the Income Tax Act 2007, the definition of voting interest, paragraph (b)	the words “and loss attributing qualifying companies (LAQC)”
section YB 1 of the Income Tax Act 2007	section YB 1(5)
section YB 1 of the Income Tax Act 2007, the list of defined terms	the words “loss attributing qualifying company”